The performance in India was the hallmark of the Amazon CEO's post-result comments that happened to be his first on the country's Internet marketplace.Payal Ganguly&Varun Jain | ET Bureau | April 29, 2017, 07:57 IST

BENGALURU | NEW DELHI: The planet’s second-richest man Jeff Bezos said on Thursday that Amazon India is the country’s most popular Web marketplace, signaling the Seattle giant’s intent to invest billions more to win the leadership race in the $16-billion online shopping industry.

The performance in India was the hallmark of the Amazon CEO’s post-result comments that happened to be his first on the country's Internet marketplace after local rival Flipkart recently raised $1.4 billion from a raft of strategic investors, including eBay Inc. Flipkart is currently ahead of Amazon India on the value of goods sold through its platform.

“We’re grateful that customers are responding — Amazon.in is the most visited and the fastest growing marketplace in India. It’s still Day 1 for ecommerce in India, and I assure you that we’ll keep investing in technology and infrastructure, while working hard to invent on behalf of our customers and small and medium businesses in India,” Bezos said.

STRONG SIGNAL TO COMPETITORSHis remarks come amid Amazon’s persistent spending in India to outrun Flipkart in the leadership race. Amazon’s first-quarter earnings beat Wall Street expectations and sent shares surging to a record. But losses in Amazon’s international business increased about four times to $481 million in the quarter, primarily because of the expenses in India. Amazon had reported a similar increase in losses in its international business in the previous quarter as well.

After Flipkart's first mega $1-billion fund-raising in July 2014, Bezos had announced a $2-billion investment in Amazon’s India business the next day. While Thursday’s statement is not as dramatic, the singling out of India in the globally tracked post-earnings commentary demonstrates Bezos’ keenness on continued investment even when the stakes are raised. Amazon has already committed $5 billion in investments to win the leadership race in the Indian market where, besides Flipkart, it also faces competition from Alibaba-backed Paytm Mall. Flipkart has raised about $4.6 billion until now, and is in talks to acquire SoftBank-backed Snapdeal.

The deal would help Flipkart, which also counts South African media firm Naspers and Chinese Internet conglomerate Tencent as its backers, strengthen its market position. “As far as the level of investment is concerned, it is certainly one of our important investment areas. We see a lot of potential for the country and our business there,” Brian T Olsavsky, Amazon’s CFO, told analysts in response to a question on how the capital expenditure in India would affect the company’s global profitability.

Amazon's global net sales rose 23% to $35.7 billion and net profit increased 41% to $724 million, marking the eighth straight quarter in which the company posted a net profit. The company cited data from comScore and SimilarWeb to say that Amazon.in was the most visited platform on both desktop and mobile devices. It also quoted app analytics firm App Annnie to claim that Amazon was India’s most downloaded shopping app.

PRIME NUMBERSOne of its key recent investment areas has been the Prime service. In July 2016, Amazon launched its Rs 499-per year subscription for Prime in the country, promising one-day and two-day deliveries in key cities. The service is sold in the US for $99. The Prime service launch was followed up with the introduction of Prime Video last quarter, and is the key programme for building customer loyalty. About 30% of the orders processed by Amazon India were attributed to users of the Prime programme, according to a company statement.

“Our India team is moving fast and delivering for customers and sellers. The team has increased Prime selection by 75% since launching the program nine months ago, increased fulfillment capacity for sellers by 26% already this year, announced 18 Indian Original TV series, and just last week introduced a Fire TV Stick optimized for Indian customers with integrated voice search in English and Hindi,” Bezos said. His statement might also be a signal to new competitors and strategic investors seeking to enter the sweepstakes for online retail, which is expected to reach $50-60 billion by 2020 from about $16 billion now, analysts said.

“As there is a lot of news in the market on the entry of new rivals, the statement by Bezos is Amazon's way of saying they are serious about India and are in this for the long term. The numbers shared by Amazon on downloads and increases in the consumer segment would also serve as signals to the competition,” said Satish Meena, senior forecast analyst at market research firm Forrester Inc. He added that Amazon’s investments in India can be broken down into three buckets—the retail business; the grocery sector for which Amazon is awaiting government approval; and the content development business for the Prime programme. It has already invested Rs 11,638 crore (about $1.8 billion) in the main India unit, Amazon Seller Services.

Amazon has also spent aggressively in expanding its fulfilment centres, building 34 of them across 10 states in India. The platform has close to 140,000 sellers, up 160% over calendar 2016. Warehouses, fulfillment services, service-provider network, in-person support, and other services such as seller cafes and instant registration to its marketplace would be potential areas of investment, Amazon India director and general manager (seller services) Gopal Pillai had told ET earlier. ET reported earlier this week that Amazon was selling nearly as many items as did Flipkart, although the Indian retailer outscored on the value of goods sold.

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